Seizing the opportunity presented by an economic downturn can also mean exposing the company to new liabilities. Our latest Risk Management Resources Bulletin discusses common threats to your business, and offers advice on how to reduce your exposure to risk.
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Insurance Premium Tax (IPT) hit the headlines in June 2017, with the standard rate rising from 10% to 12%.
The most significant consequence of this increase was an increase in premiums for consumers and businesses, leading the Association of British Insurers to warn that these tax rises only serve to punish responsible people who have done the right thing by buying cover for their cars and homes.
Just over a year later, and it has been revealed that this controversial tax hike has swelled the government’s coffers by an additional £808 million – 19% higher than the government’s projection of £680 million*. The total IPT income for UK plc for the year ending March 31st 2018 was an extraordinary £5.94 billion.
Insurance Premium Tax (IPT) is a tax that is applied to the majority of general insurance policies. This is because VAT is not applicable on insurance products, so the Government require IPT to be paid instead.
There are two rates:
• a standard rate (12%)
• a higher rate – for travel insurance, mechanical or electrical appliances insurance and some vehicle insurances (20%)
The IPT should be listed in your insurance quotes.
IPT is applied to the majority of general insurance policies for both consumers and businesses. If you’re a business owner, IPT will appear on your public and employee liability policies, as well as company car insurances and private medical care.
Unfortunately, those who can afford it the least have been the hardest hit by the increase in IPT. Small businesses and sole traders are particularly affected by inflated premiums and should take advice from a professional broker to ensure they’re adequately covered, before making the decision to cut back on policies. An experienced broker will assess your level of risk, ensure you’re not paying for unnecessary insurance and help you get the best price possible.
Is Insurance Premium Tax likely to rise again?
The insurance industry spoke out about future rises in IPT and to date it has remained at 12%, but with uncertain times ahead, there’s no guarantee it will stay that way. The Government still argues that the IPT rates in Britain are below those of other countries.
Simon Gubbins, Managing Director at Robison & Co., said: “Investing in insurance cover is a responsible way of protecting yourself, others and your assets, and we don’t believe consumers or businesses should be penalised with rising premiums caused by unnecessary tax increases. These rises just discourage an uptake in insurance, leaving consumers and businesses vulnerable.
Businesses in particular face increasing challenges and risks all the time and the insurance industry evolves to provide policies that will protect organisations if the worst happens. Cyber insurance for example, is a relatively new type of cover that is available following the influx of cyber-attacks and data breaches we’ve seen over the past couple of years, and businesses with these policies in place could find it makes all the difference in the event of an incident.
Rising premiums simply make insurance less accessible to those who need it and forces individuals and businesses to increase their risk by not having appropriate cover in place. Businesses should consider a review of their insurance policies with a professional broker, this will ensure you’re only paying for the cover you need and will reduce the burden of increased IPT by reducing your premiums.
We were pleased to see no further increases in IPT when the last budget was announced and hope that the voices of those who have spoken out against the steadily increasing IPT are still being heard loud and clear!”
Robison & Co is an owner-managed insurance brokerage, offering advice on all areas of business and personal insurance, as well as independent financial advice on investments, mortgages and pensions.
For an insurance quote, or a review of your existing insurance policies, please contact us on: 01730 265500 or email hello@robison.co.uk
*Statistics from national accountancy group, UHY Hacker Young
In light of the United Kingdom’s recent commercial CO2 shortage, it is vital now more than ever to stay informed on business continuity and supply chain planning within your organisation. This Risk Insights summary discusses how the CO2 shortage will impact the manufacturing industry, short term coping measures and long term methods for your organisation to keep in mind for future business interruption disasters.
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Understanding the importance of implementing effective safety programmes in your manufacturing facility can have a big impact on your bottom line. This article discusses safety costs and measuring the value of safety programmes. Find out how to lower costs by implementing safety programmes here.
If you own a manufacturing business, Robison & Co offer bespoke insurance cover for manufacturers. Find out about our manufacturing insurance solutions.
For many motorists, incurring significant damage to your vehicle is a costly inconvenience, resulting in either time off the road for repairs, or in the worst-case scenario, your car being written off. But imagine the impact if you were reliant on your car as your main source of income?
This is the reality faced by driving instructors, and when you consider the nature of their business, the risk of accidental damage when compared to normal motorists is quite high.
If your car is stolen or written off, a standard motor insurance policy will pay out the current market value. However, this could be less than what is needed to replace the vehicle, and as most cars depreciate quite quickly, may not cover any outstanding finance or lease agreement. For a driving instructor, once you take loss of earnings into account, and loss of customers due to the absence of a vehicle in which to teach them, it’s not long before losing your vehicle could cost you your business.
Online comparison sites are not the answer for this kind of specialist motor insurance. You need to talk through your requirements with an expert, who will help you identify all the potential risks to make sure you and your business are protected should the worst happen.
At Robison & Co. we work with a number of specialist motor insurance providers offering GAP insurance – an insurance policy specifically designed for driving instructors. As the name suggests, GAP insurance will bridge the gap between the current market value of your vehicle and the purchase price, or if greater, any early settlement amount that is owed to a finance company. The policy will even cover any modifications needed to a new vehicle, to make it appropriate for driving school use.
Simon Gubbins, Managing Director at Robison & Co., said: “The average salary for a driving instructor in the UK is typically up to £30k per annum, so if you consider the monthly losses that could be incurred should your vehicle be stolen or written off, it’s simply not worth taking the risk on a motor insurance policy which may not pay out for an adequate replacement or cover any outstanding finance.
With any form of business insurance, it’s always worth talking though the potential risks with a professional who understands your industry and can recommend the best policies for your individual requirements. Too often people buy off-the-shelf policies that don’t have their best interests at heart and unfortunately the results can be costly.”
Robison & Co is an owner-managed insurance brokerage, offering advice on all areas of business and personal insurance, as well as independent financial advice on investments, mortgages and pensions.
For a quote on your driving instructor insurance, or a review of your existing insurance policies, please contact us on: 01730 265500 or email hello@robison.co.uk
